Many companies find themselves caught in a vicious circle. They need specialized capabilities in building new applications but don't have the available talent in-house to develop those systems. With little or no choice, they turn to outsourcers or contractors to bail them out.
Meanwhile, full-time staffers perform routine maintenance work that offers none of the professional challenges that can inspire workers to expand their skills.
Nationwide Insurance opted to try something different and, in 2008, opened an IT development center for its staff.
"What we were trying to find out is whether there was any way for us to implement more current software development techniques and lean management principles and use technology appropriately [so that] we can bring a group of people to a much higher level than they've been in the past," says Srini Koushik, senior vice president and chief technology officer for Nationwide.
(For more on Koushik, check out an archived interview from 2007.)
What started as a pilot program for 30 to 35 IT workers has grown to more than 200 people by the end of 2009.
"In 2010, we probably will double the size of it, but more important, our biggest objective for this year is to get certified as a CMM Level 3 development center," says Koushik. Typically that process takes an IT department 18 to 24 months, he adds. Nationwide hopes to complete certification within 12 months.
Prior to the development center, Nationwide hired outside contractors who learned skills they then would take somewhere else. "Most of our applications are built with J2EE," says Koushik. "Many of our contractors had a decent understanding of J2EE, but they became experts by the time they walked out of here. What we had to do was figure a way to build that capability internally and get our associates off supporting old systems and into developing new systems."
Today, explains Koushik, the personnel formula works something like this: Approximately half of the staff is assigned full time to the development center, moving from project to project. Between 20 percent and 30 percent come from application support areas. "We bring them in, get them trained, and send them back to support roles," he says.
The remaining 20 percent to 30 percent come from temporary supplementation and contractors.
"The way we were able to make this work is project demand tends to be variable when you look at a specific area," says Koushik. "But when you look at it from a Nationwide IT level, it's not variable. What we saw was the last four or five years we were spending $150 million-plus on putting out new applications. While the demand may vary from one solution area to another, we constantly were building new applications."
The business model of the development center was designed around building and maintaining capacity to churn out that type of application development work, notes Koushik. "We looked at the problem differently, tried to solve it at a holistic level, and came up with a solution that is working well for us," he says.
"If you walked into the development center, you would see teams working on projects from across the company," adds Koushik. "It's a place our solutions areas send work to get done."
The strategy, continues Koushik, is to define the requirements, and during the requirements definition process, vendors are brought in to take Nationwide through what the carrier calls the DDI core–design, develop, and implement.
"The solution areas still have to do a lot of the requirements development, but instead of going to separate vendors to do the systems integration, the vendors are coming to the development center," he says. "We have the capacity and skills to go out and build a lot of these applications."
Nationwide also has a portfolio management process, and once projects are approved for funding, the IT leadership looks at which projects belong in the development center and at what point the projects are brought in.
One benefit of the development center is the ability to augment integration. "The way the marketplace is evolving we have to keep looking at Software as a Service (SaaS) and other solutions that already are available," says Koushik.
One advantage of the development center is it allows Nationwide to reach a point where the employee work force has the right training and the right skills to help the carrier succeed in this marketplace.
"This is aimed at our associates in helping them develop better skills," says Koushik. "When you start looking at the types of advances we are making in facilities and tools and having our development center predominantly an associate-based center, it's a shift from the way we managed things before. It's an investment in people and in keeping them here."
– Robert Regis Hyle
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